Consumers often engage in payment transactions with merchants for the purchase of goods or services. Ideally, such transactions result in a benefit to both parties: consumers receive the transacted-for goods or services, and merchants receive money or some other benefit in exchange. However, in some instances consumers may be unhappy with the goods or services received. For example, a consumer may discover that a purchased product is broken or defective, is an incorrect color or size, or is otherwise not as advertised or presented by the merchant, or is unwanted for another reason. In such instances, the consumer may desire some form of compensation to make up for the problem with the purchased item.
In many situations, consumers may have two potential courses of action to take when they are unsatisfied with a purchase. The first is that a consumer may return the product to the merchant and request reimbursement for the purchase. In such a situation, the merchant may examine the returned merchandise and, if satisfied, return the purchase amount to the consumer. However, some merchants may only refund the amount to a gift card used only at the merchant, provide in-store credit to the consumer, or place a hold on providing the refund to a payment card used to make the purchase. Such methods may leave the consumer unfulfilled, by either not timely receiving their money when they return the product, or by being forced to continue to still spend their money at the merchant, especially if they return was for reasons related to the merchant's service.
The second course of action is that the consumer may contact their issuer and initiate a chargeback. In a chargeback, the issuer of the payment account used to fund the transaction reverses the transaction and credits their account, and then submits a chargeback request to the merchant to receive the money for the transaction. Chargebacks may be advantageous over returns for consumers as the consumers may receive their money immediately, and may also not be restricted to a gift card or in-store credit that can only be used at the merchant. However, chargebacks often require significant steps to be performed by the consumer to be initiated. Many issuers require the consumer to submit a formal request for a chargeback, including providing detail as to the transaction and the nature of the request for a chargeback, such as by describing the deficiencies of a product that has left the consumer unsatisfied. In addition, chargebacks often place the burden of proof on the merchant in disputing a chargeback. As a result, consumers may request a chargeback and cite a defective product, even when the product is not defective, and the merchant may be unable to provide sufficient evidence of the non-defective product. This could result in a loss of both merchandise and money for the merchant.
Thus, there is a need to provide a technical system that can more easily initiate chargebacks with merchants while also protecting the merchants involved by processing chargebacks only in instances where products are to be returned.